A Retrospective Look at Wholesale Gas: Industry Restructuring

Jeffrey Leitzinger and Martin Collette

Journal of Regulatory Economics, 2002, vol. 21, issue 1, 79-101

Abstract: The purpose of this paper is to identify lessons learned from the restructuring of the natural gas industry. We draw a number of conclusions including that the billions of dollars of savings typically attributed to gas industry restructuring resulted not from competition but because restructuring stranded billions of dollars in contractual purchase obligations, costs that were absorbed by producers and pipelines. The replacement of regulated wholesale merchants by new entrants did not occur because of competitive efficiencies. Competition in wholesale gas marketing has produced consumer benefits in the form of innovation, new product development, broader choices and possibly reduced costs. Bi-lateral contracting led to the development of gas markets, which in turn, produced market-wide diffusion and integration of pricing information. Copyright 2002 by Kluwer Academic Publishers

Date: 2002
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